Update: More major Dell stakeholders say no to go-private deal

Michael Dell's effort faces strong opposition; Icahn wants his job.

As the vote approaches on Michael Dell's joint offer with Silver Lake Partners to take Dell, Inc private, two more large stockholders have lined up to cast their ballots against the deal. TheWall Street Journalreports that Vanguard Group, State Street Corp, and BlackRock Inc, which together own 11.5 percent of Dell Inc's stock, will oppose the Dell/Silver Lake offer of $13.65 a share.

If the three investment companies join the existing opponents to the deal, that will bring the shares opposing Michael Dell's plans to take the company private to nearly 30 percent. To overcome that voting block, Dell will need those who hold at least 42 percent of the remainder of the company's stock to vote with him. Southeastern Management, which owns 8.5 percent of Dell, is another major institutional shareholder opposing the deal.

There are several opposing offers being presented for Dell, including one from infamous corporate raider Carl Icahn's hedge fund. Today, Icahn told an audience at CNBC's Delivering Alpha conference that he wants to take control of Dell himself. "The most money I've made is when I control companies and get into them," he said.

The vote on the buyout offer is scheduled for Thursday. But Dell's board of directors is rumored to be moving to delay the vote in an effort to line up more support for the deal.

Update: This morning, Dell's board voted to "adjourn" the vote on the offer, rescheduling it for July 24.

"The most money I've made is when I control companies and get into them."

I get that the guy is a hedge fund manager and thus by definition has to care only about money and making it for himself, but could he at least try to obfuscate the greed and hubris until he's got an outside chance of actually MAKING the purchase? From the linked article: "Icahn has committed $5 billion toward a Dell buyout -- $3.5 billion from his fund and $1.5 billion from investment bank Jefferies. Dell and Silver Lake's purchase price is $24 billion. To actually win the fight for Dell, Icahn knows he needs a lot more money."

EDIT: Glad to see dbright and I both picked up on this particular nugget.

If I was Michael Dell I would immediately hand in my resignation and sell all my stock, then start building the company he was trying to turn Dell into.

It worked out pretty well for Steve Jobs.

Assuming you're talking about NeXT, that company was on the brink of extinction before Apple bought them. As an early NeXT adopter I watched them go from offering high-style hardware to compromised hardware to no hardware to practically no OS sales (their main focus became WebObjects) to the hail-mary pass that Apple caught at the last minute. Back then, having the name 'Steve Jobs' was no guarantee for success (nor did having the name 'Apple Computer').

Michael Dell may have been a major figure in the history of personal computing, but he's no Steve Jobs. The fact that this deal is still getting drawn out like this rather than reaching a decisive conclusion pretty much shows that.

(I thought it was already a done deal, so this story certainly comes as a surprise.)

If only private equity guys had long term vision instead of this garbage where they get money quick and then leave the company in flames. All they ever create is paper profits and they're ruining the health of the economy.

This is sad. I feel like I'm watching vultures circle and rip apart a still fresh corpse. Dell used to be a great company that made some cool stuff, it sucks to see it come to this - but I guess this is how markets realign themselves. I just wish we had more competition in the tablet/smart phone space.

I'm going to sit back and laugh my ass off if they totally block this move only to see the company go bankrupt in 5 years. Or maybe that is their idea? Hold out for bankruptcy, hope that a company like Lenovo comes in to buy them out so shares spike and SELL SELL SELL so the can get out with a profit?

This is sad. I feel like I'm watching vultures circle and rip apart a still fresh corpse. Dell used to be a great company that made some cool stuff, it sucks to see it come to this - but I guess this is how markets realign themselves. I just wish we had more competition in the tablet/smart phone space.

This has nothing to do with market realignment. Lenovo is still selling strong. Not 1990's strong, but still solid. The "realignment" as you call it is people saying hell no to Windows 8.crap. This has everything to do with Dell putting out shit products and some of the worst customer support in the industry. And I state that as a former Dell warranty tech for 5+ years who was making maybe $20 per warranty call. Dell was scraping the bottom of the barrel, and it showed in their products under the hood. On the surface in the last couple years they "appeared" to be quality products but under the hood? Hell no.

I'm so glad I got out of that warranty racket job, and into something more stable and frankly more satisfying and confidence building. I worked at BancTec and Worldwide Tech Services. Frankly my morale while working there was something slightly above feeling like a slave.

""The most money I've made is when I control companies and get into them," he said."

Yup. Like Tronox. Boy, he really helped them become profitable. Or bankrupt. I kind of forget which is which sometimes.

Like a "good" parasite, he gets wealthy while the host company wastes away.

The world needs to face up to the fact that while a leech now and again may be good for the immune system, right now there are so many on the patient that he is bordering on death by blood loss. And what the doctors are proscribing is a combination of adrenaline, steroids, and blood letting...

Every desktop I've seen out of Dell - the ones I've had the displeasure of working on - have corners cut in really bad places, they feel like the bare minimum was put into them needed to make a sale. Their other product lines (like their monitors) seem to follow that paradigm. That's fine - budget brands are useful - but in a saturated, stagnant market it's bad news. A cheap PC is a mid-range computing peripheral now that tablets and smartphones take up the trashy low end side of things.

Dell PCs are competing directly with tablets and smartphones for consumer dollars (though this is not the case for business dollars). They can't win.

Every desktop I've seen out of Dell - the ones I've had the displeasure of working on - have corners cut in really bad places, they feel like the bare minimum was put into them needed to make a sale. Their other product lines (like their monitors) seem to follow that paradigm.

And seconded.Every Dell product that I've encountered - from thin clients to rack servers, and laptops to workstations - has either had some serious design flaw or simply disintegrated on me after a couple of years. When a potential customer will rule out anything made by your company just because it has your name on it, it's obvious that there's a problem somewhere.

Every desktop I've seen out of Dell - the ones I've had the displeasure of working on - have corners cut in really bad places, they feel like the bare minimum was put into them needed to make a sale. Their other product lines (like their monitors) seem to follow that paradigm.

And seconded.Every Dell product that I've encountered - from thin clients to rack servers, and laptops to workstations - has either had some serious design flaw or simply disintegrated on me after a couple of years. When a potential customer will rule out anything made by your company just because it has your name on it, it's obvious that there's a problem somewhere.

And that problem is likely what Dell thinks he can fix by taking the company private. Chasing the short term profits is all too often the cause of these problems, and that chase is usually induced by the company becoming publicly traded. With potential dividends acting as a carrot for pump and dump trading.

The number 1 failing workstations in our company have been HP. Our HP servers have done well. We've got stacks of P4 IBM's that still work, outlived most of the HP XW workstations we've cycled in and out. Our Dell line-up's are mixtures of OptiPlex to Vostro, none of them have made it to junk yard yet. Our PowerEdge servers have done well also. The point is, what corners is Dell cutting that makes their hardware so much worse? I've not seen any major failures, maybe we've been lucky, don't know. We aren't married to any one vendor, we go where the best deal is and for the past 3 or so years that's been Dell and we've not had any major issues.

This is sad. I feel like I'm watching vultures circle and rip apart a still fresh corpse. Dell used to be a great company that made some cool stuff, it sucks to see it come to this - but I guess this is how markets realign themselves. I just wish we had more competition in the tablet/smart phone space.

This has nothing to do with market realignment. Lenovo is still selling strong. Not 1990's strong, but still solid. The "realignment" as you call it is people saying hell no to Windows 8.crap. This has everything to do with Dell putting out shit products and some of the worst customer support in the industry. And I state that as a former Dell warranty tech for 5+ years who was making maybe $20 per warranty call. Dell was scraping the bottom of the barrel, and it showed in their products under the hood. On the surface in the last couple years they "appeared" to be quality products but under the hood? Hell no.

I'm so glad I got out of that warranty racket job, and into something more stable and frankly more satisfying and confidence building. I worked at BancTec and Worldwide Tech Services. Frankly my morale while working there was something slightly above feeling like a slave.

That's a nice theory but the facts don't back it up. Computers are lasting longer, that is why they aren't being replaced - it has nothing to do with Windows 8. Heck, there are still plenty of people running Windows XP. They aren't saying no, they just aren't bothering to upgrade. Where people ARE making frequent tech purchases are mobile. So realignment:

Old Market- No longer making frequent upgrades

New Market- People are still making frequent upgrades

Microsoft and PC manufacturers, if they want to have a constant revenue stream like the old days need to move from desktops and laptops and into mobile tablets and smartphones. So.. you know... realign themselves. Windows 8 is a perfectly great solution, my own company is switching to it because a Surface tablet can run everything we sell to our clients - but be easy for our consultants to bring to a meeting.

As for your work at Dell, I'm sorry it sucked so much for you. Sounds like hell, but the Dell laptop I purchased in 2001 and is running Windows XP is STILL working. I turn it on for laughs every once in a while, but if I felt like replacing the power cord (it is finicky) it would work just as well as the day I bought it - refurbished from Dell!

The number 1 failing workstations in our company have been HP. Our HP servers have done well. We've got stacks of P4 IBM's that still work, outlived most of the HP XW workstations we've cycled in and out. Our Dell line-up's are mixtures of OptiPlex to Vostro, none of them have made it to junk yard yet. Our PowerEdge servers have done well also. The point is, what corners is Dell cutting that makes their hardware so much worse? I've not seen any major failures, maybe we've been lucky, don't know. We aren't married to any one vendor, we go where the best deal is and for the past 3 or so years that's been Dell and we've not had any major issues.

Frankly I think Dell's reputation is fine in the business space. Their pro-grade client equipment is very solid - I swear by the Latitude line. I've seen enough of their servers to know that they do develop issues eventually, but this happens long after the equipment itself is obsolete and no longer supported.

Commodity consumer equipment is invariably garbage, from Dell, HP, Acer, whatever. This should not surprise anyone.

Icahn will sink this company, and it's disappointing. For the company itself, what it might become, and most of all for its employees.

Quote:

Where people ARE making frequent tech purchases are mobile.

I don't see this lasting forever, either. The high-end, high-margin smartphone market is looking pretty tapped out. And I don't see why the consumer replacement cycle on tablets should be any more frequent than that of PCs.

As for your work at Dell, I'm sorry it sucked so much for you. Sounds like hell, but the Dell laptop I purchased in 2001 and is running Windows XP is STILL working. I turn it on for laughs every once in a while, but if I felt like replacing the power cord (it is finicky) it would work just as well as the day I bought it - refurbished from Dell!

I can tell you from practical experience you are NOT the standard. And I say this as someone who did field work with this junk AND supported an enterprise environment of 700 systems mixed between Lenovo and Dell laptops. The Dells by far failed more often. To the extent that within 2 years all 400 were swapped out for Lenovo systems. I was, without exaggeration, replacing motherboards on a weekly basis on these systems. When not onsite for that account I was taking 60+ system boards with me to companies and sitting there for 2 days on end replacing system boards. I get that you will always have some bad systems out there. Dell, Lenovo, HP, even Apple. But working for the company I worked for I did Dell, and Lenovo warranty and Dell repairs where more active by far. I say this purely based on observation.

As for your work at Dell, I'm sorry it sucked so much for you. Sounds like hell, but the Dell laptop I purchased in 2001 and is running Windows XP is STILL working. I turn it on for laughs every once in a while, but if I felt like replacing the power cord (it is finicky) it would work just as well as the day I bought it - refurbished from Dell!

I can tell you from practical experience you are NOT the standard. And I say this as someone who did field work with this junk AND supported an enterprise environment of 700 systems mixed between Lenovo and Dell laptops. The Dells by far failed more often. To the extent that within 2 years all 400 were swapped out for Lenovo systems. I was, without exaggeration, replacing motherboards on a weekly basis on these systems. When not onsite for that account I was taking 60+ system boards with me to companies and sitting there for 2 days on end replacing system boards. I get that you will always have some bad systems out there. Dell, Lenovo, HP, even Apple. But working for the company I worked for I did Dell, and Lenovo warranty and Dell repairs where more active by far. I say this purely based on observation.

It depended when you were working on them.

The late 2000s had a lot of problems in the Optiplex line, particular the 270s and 280s, which weren't actually Dell's fault: they were victims of the crappy capacitors that hit every manuf. I myself replaced the boards in just about every 270 I had onsite, and a lot of the 280s died premature deaths because of those caps, but excepting that the 620s had PSUs that died sooner after the extended warranty than I would have liked them to (which was still 3+ years), the 745-9010 lines have been good performers for us. Hell, I still have a training room full and spares of the 260s that just never seem to quit. I'd still have the Optiplex 150s around if their CPUs and drives hadn't just became too outdated to be useful (PIIIs with 40gb PATA drives).

On the laptop side, we had 610s run far longer than is sane, 620/630ss that I'm still using as loaners. The 6400s and 6410s were fine but really could have had some better attention paid to the keyboard designs; they always looked a little "bumped". The 6420s and 6430s are solid, though.

As for the rest, listen, they're mass produced and fairly inexpensive, but work well for corporate environments. If you've got hundreds of internal customers you 1) should be keeping spares and 2) getting the 3-year gold support for every machine. That's standard in any enterprise I've ever worked in that wasn't a startup.

Every desktop I've seen out of Dell - the ones I've had the displeasure of working on - have corners cut in really bad places, they feel like the bare minimum was put into them needed to make a sale. Their other product lines (like their monitors) seem to follow that paradigm.

And seconded.Every Dell product that I've encountered - from thin clients to rack servers, and laptops to workstations - has either had some serious design flaw or simply disintegrated on me after a couple of years. When a potential customer will rule out anything made by your company just because it has your name on it, it's obvious that there's a problem somewhere.

I cant agree on the servers part. Been supporting more than 2000 Dell servers and the experience has been quite good. Not saying the servers last for 10 yrs but the part replacement and firmware upgrades have been spot on. Cant say the same for desktops though..

The number 1 failing workstations in our company have been HP. Our HP servers have done well. We've got stacks of P4 IBM's that still work, outlived most of the HP XW workstations we've cycled in and out. Our Dell line-up's are mixtures of OptiPlex to Vostro, none of them have made it to junk yard yet. Our PowerEdge servers have done well also. The point is, what corners is Dell cutting that makes their hardware so much worse? I've not seen any major failures, maybe we've been lucky, don't know. We aren't married to any one vendor, we go where the best deal is and for the past 3 or so years that's been Dell and we've not had any major issues.

My suspicion is that the business models (OptiPlex & Poweredge) are probably built better than the home DELL lines. They didn't want to lose all profit dealing with warranty issues.

Assuming you're talking about NeXT, that company was on the brink of extinction before Apple bought them. As an early NeXT adopter I watched them go from offering high-style hardware to compromised hardware to no hardware to practically no OS sales (their main focus became WebObjects) to the hail-mary pass that Apple caught at the last minute. Back then, having the name 'Steve Jobs' was no guarantee for success (nor did having the name 'Apple Computer').

Apple didn't buy NeXT. NeXT bought Apple. Sure they were struggling but they built the foundation for what is currently the largest tech company in the world, and everything from the technology to the staff at today's Apple came from NeXT.

I think you're wrong to say NeXT was about to vanish. If Apple hadn't bough them, I'm sure someone else would have and all that technology and the expert employees would have taken *that* company to where Apple is today.

Michael Dell may have been a major figure in the history of personal computing, but he's no Steve Jobs. The fact that this deal is still getting drawn out like this rather than reaching a decisive conclusion pretty much shows that.

A moment ago you said "having the name 'Steve Jobs' was no guarantee for success" but clearly Steve Jobs did succeed, and now you're saying Michael Dell can't succeed? How do you know that? Jobs proved how hard it is to judge these things, and I think Michael Dell has a better chance at doing something great than almost anyone in the world.

He's already created a massively successful tech company once, I don't see why he can't do it a second time - if anything he'll do a better job after learning from whatever mistakes he's made over the last three decades.

I know the main objective for Dell to become private is obviously to become more profitable, and by private it certainly means for *some* people to make more cash.

From what I understand, it should calm down the obsession with quarterly instant profits in the decision making process by involving fewer people.

Dell is huge, but with all the news about the "post-pc era" and Moores law become slightly less insane than before, people buy less pc than before, the market is super competitive: the margins are thin.

my question:

Would a private Dell have the financial autonomy to "bet" on more innovation?Could they afford more radical developments that are certainly not instant profit?I'm seeing the shareholders stopping R&D/Business D throwing shit at the wall for too long, (but what about that funky shit !)

Sean Gallagher / Sean is Ars Technica's IT Editor. A former Navy officer, systems administrator, and network systems integrator with 20 years of IT journalism experience, he lives and works in Baltimore, Maryland.